U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

(Mark One)

 X          Quarterly  report  pursuant to Section 13 or 15(d) of the Securities
----        Exchange Act of 1934 
                For the  quarterly  period ended  September  30, 1996 or
----        Transition  report pursuant to Section 13 or 15(d) of the Securities
            Exchange   Act   of   1934
                For the transition period from ________to________


Commission File No. 0-13836


                          SILICON VALLEY RESEARCH, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


        California                                           94-2743735
--------------------------------------------------------------------------------
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                            Identification No.)


 6360 San Ignacio Avenue  San Jose, CA                        95119-1231
--------------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)

                                 (408) 361-0333
--------------------------------------------------------------------------------
               Registrant's telephone number, including area code


--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report.)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                         YES   X               NO
                             -----                -----

Indicate the number of shares  outstanding  of each of the  Issuer's  classes of
common stock, as of the latest practicable date.

           Common Shares Outstanding at September 30, 1996: 11,441,892


            This report, containing all exhibits, contains 13 pages.
                        The exhibit index is on page 11.

<PAGE>

<TABLE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES

                                      INDEX
<CAPTION>

                                                                                                            Pages
<S>                                                                                                         <C>
Part I.           FINANCIAL INFORMATION

                  Item 1.      Financial Statements

                  Consolidated Balance Sheets -
                     March 31, 1996 and September 30, 1996                                                      3

                  Consolidated Statements of Operations -
                     Three and Six  Months Ended September 30, 1995 and 1996                                    4

                  Consolidated Condensed Statements of Cash Flows -
                     Three and Six Months Ended September 30, 1995 and 1996                                     5

                  Notes to Consolidated Financial Statements                                                    6

                  Item 2.      Management's Discussion and Analysis of
                               Financial Condition and Results of
                               Operations                                                                    7-10

Part II.          OTHER INFORMATION                                                                         10-11

                  Item 1       Legal Proceedings
                  Item 2       Changes in Securities
                  Item 3       Defaults Upon Senior Securities
                  Item 4       Submission of Matters to a Vote of
                               Securities Holders
                  Item 5       Other Information
                  Item 6       Exhibits and Reports on Form 8-K

                  Signature                                                                                    12

Exhibit 27.       Financial Data Schedule                                                                      13


</TABLE>
                                  Page 2 of 13

<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                 (In thousands)

Assets                                         March 31, 1996 September 30, 1996
------                                         -------------- ------------------
                                                                  (Unaudited)
Current Assets:
Cash and cash equivalents                         $ 10,238         $  6,073
Accounts receivable, net of allowances of                          
            $25 and $137, respectively               4,650            4,829
Prepaid expenses and other current assets              286              704
                                                  --------         --------
                                                    15,174           11,606
                                                                   
Fixed assets, net                                      537              764
Other assets, net                                    1,381            5,133
                                                  --------         --------
                                                  $ 17,092         $ 17,503
                                                  ========         ========
                                                                   
Liabilities and Shareholders' Equity                               
------------------------------------
                                                                   
Current Liabilities:                                               
Accounts payable                                  $    321         $    464
Accrued expenses                                     1,329            1,599
Deferred revenue                                     1,537            3,369
Current portion of long-term debt                      139              210
                                                  --------         --------
                                                     3,326            5,642
                                                                   
Long-term debt                                          38               19
                                                  --------         --------
                                                                   
                                                     3,364            5,661
                                                  --------         --------
                                                                   
Shareholders' Equity:                                              
Preferred stock, no par value:                                     
     Authorized: 1,000 shares                                      
     Issued and outstanding: none                     --               --
Common stock, no par value:                                        
     Authorized: 25,000 shares                                     
     Issued and outstanding:  11,308 shares                        
         at March 31, 1996 and 11,442 shares                       
         at September 30, 1996                      31,171           31,413
Accumulated deficit                                (17,423)         (19,536)
Cumulative translation adjustment                      (20)             (35)
                                                  --------         --------
                                                    13,728           11,842
                                                  --------         --------
                                                                   
                                                  $ 17,092         $ 17,503
                                                  ========         ========
                                                                
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                  Page 3 of 13
<PAGE>
<TABLE>


                                       SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                                            Consolidated Statements of Operations
                                                         (Unaudited)
                                            (In thousands, except per share data)
<CAPTION>

                                                          Three Months Ended               Six  Months Ended
                                                              September 30,                    September 30,
                                                           1995         1996               1995         1996
                                                        ----------   ---------           --------      --------
<S>                                                       <C>          <C>               <C>           <C>    
Revenue:
License fees and other                                    $ 1,629      $   399           $  3,508      $ 2,857
Maintenance fees                                              867          761              1,631        1,414
                                                          -------      -------           --------      -------
         Total revenue                                      2,496        1,160              5,139        4,271
                                                          -------      -------           --------      -------

Cost of revenue:
Cost of license fees and other                                 88          215                154          334
Cost of maintenance fees                                       98          137                222          236
                                                          -------      -------           --------      -------
         Total cost of revenue                                186          352                376          570
                                                          -------      -------           --------      -------

Gross margin                                                2,310          808              4,763        3,701
                                                          -------      -------           --------      -------

Operating expenses:
Engineering, research and development                         820          844              1,634        1,512
Selling and marketing                                       1,224        1,781              2,584        3,349
General and administrative                                    194          695                384        1,103
                                                          -------      -------           --------      -------
         Total operating expenses                           2,238        3,320              4,602        5,964
                                                          -------      -------           --------      -------

Operating income(loss)                                         72       (2,512)               161       (2,263)
                                                          -------      -------           --------      ------- 

Other income (expense):
    Interest income                                            15           87                 21          199
    Interest expense                                          (18)          (8)               (46)         (16)
    Other, net                                                 (6)           1                 (3)           2
                                                          -------      -------           ---------     -------
         Total other income (expense)                          (9)          80                (28)         185
                                                          -------      -------           ---------     -------

Income(loss) before provision for
    income taxes                                               63       (2,432)               133       (2,078)

Provision for income taxes                                     --           --                 --           35
                                                          -------      -------           ---------     -------

Net income(loss)                                          $    63      $(2,432)          $    133      $(2,113)
                                                          =======      =======           ========      ======= 


Net income(loss) per share                                $  0.01      $ (0.20)          $   0.01      $ (0.17)
                                                          =======      =======           ========       ====== 


Shares used in per share calculation                       10,527       12,271             10,055       12,406
                                                          =======      =======           ========       ====== 

<FN>
                                  The accompanying notes are an integral part of these consolidated
                                                       financial statements.
</FN>
</TABLE>

                                                            Page 4 of 13
<PAGE>


                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                 Consolidated Condensed Statements of Cash Flows
                                   (Unaudited)
                                 (In thousands)


                                                             Six Months Ended
                                                               September 30,
                                                            1995         1996
                                                          --------     --------
Cash Flows from Operating Activities:
Net income (loss)                                         $    133     $ (2,113)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
         Depreciation and amortization                         391          679
Changes in assets and liabilities:
         Accounts receivable                                (1,092)        (245)
         Prepaid expenses and other current assets            (114)        (420)
         Accounts payable                                      142          145
         Accrued expenses                                     (411)         277
         Deferred revenue                                     (151)       1,853
         Other, net                                             (5)      (2,164)
                                                          --------     --------

Net cash used in operating activities                       (1,107)      (1,988)
                                                          --------     --------

Cash Flows from Investing Activities:
Acquisition of fixed assets                                   (310)        (283)
Software production costs and software licenses               (413)      (2,102)
                                                          --------     --------

Net cash used in investing activities                         (723)      (2,385)
                                                          --------     --------

Cash Flows from Financing Activities:
Principal payments of long-term debt and
    other liabilities                                         (332)         (68)
Proceeds from issuance of common stock                       3,352          242
                                                          --------     --------

Net cash provided by financing activities                    3,020          174
                                                          --------     --------

Effect of exchange rate changes on cash                       --             34
                                                          --------     --------

Net increase (decrease)  in cash and
    cash equivalents                                         1,190       (4,165)
Cash and cash equivalents at beginning
    of  period                                               1,248       10,238
                                                          --------     --------

Cash and cash equivalents at end
    of period                                             $  2,438     $  6,073
                                                          ========     ========

        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                  Page 5 of 13

<PAGE>



                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         September 30, 1996 - Unaudited
                                 (In thousands)

Note 1: The accompanying consolidated financial statements have been prepared by
the  Company,  pursuant  to the  rules and  regulations  of the  Securities  and
Exchange  Commission for interim financial  statements.  Therefore,  they do not
include all the disclosures  which were presented in the Company's annual report
on Form 10-K. These financial statements do not include all disclosures required
by generally accepted accounting  principles and accordingly,  should be read in
conjunction  with the  consolidated  financial  statements and notes included as
part of the Company's latest annual report on Form 10-K.

In the opinion of management,  the consolidated financial statements include all
adjustments  (consisting  only of normal  recurring  adjustments)  necessary  to
present fairly the consolidated  financial  position,  results of operations and
cash flows for the interim period.  The results of operations  presented are not
necessarily  indicative  of the results to be expected  for the full year or for
any other period.

Note 2:       Statement of Cash Flows Information           Six  Months Ended
                                                              September  30,
                                                             1995        1996
                                                           -------      -------
Supplemental Cash Flow Information:
              Cash paid during the period for:
                 Interest                                  $    46      $    16
                 Income taxes                              $    --      $    13

Note 3:         Other Assets                             March 31, September 30,
Other assets comprise:                                      1996         1996
                                                           -------      -------

Software development costs                                 $ 1,133      $ 1,697
Software licenses                                            1,211        2,744
                                                           -------      -------
                                                             2,344        4,441
Less accumulated amortization                               (1,330)      (1,833)
                                                           -------      -------
                                                             1,014        2,608
Loan to officer                                                100          217
Prepaid royalties                                             --          1,213
Long term receivables                                         --            820
Other                                                          267          275
                                                           -------      -------
                                                           $ 1,381      $ 5,133
                                                           =======      =======


In June 1996,  the Company  entered into an  agreement  whereby  Silicon  Valley
Research was granted the exclusive marketing rights to Bell Labs' CLOVER line of
deep submicron verification products worldwide,  with the exception of Japan and
Taiwan, where the Company will co-market with Bell Labs' existing  distributors.
Pursuant to the agreement,  the Company  agreed to make future  payments to Bell
Labs as  follows:  $500 in fiscal  1997,  $1,250 in fiscal  1998,  and $1,000 in
fiscal 1999, which are guaranteed.

During the quarter  ended  September  30,  1996,  the  Company  received a large
purchase  order  for  products  in  which  the  license  fees  will  be  paid in
installments  over  fifteen  months.  Accordingly,  the Company  will  recognize
revenue on this sale as the payments become due under the purchase order.

Note  4:        Litigation
The Company is subject to certain types of  litigation  during its normal course
of business. In December,  1994, the Company was named as defendant in an action
brought by a competitor in the Santa Clara County Superior Court alleging unfair
competition and breach of contract.  The third amended complaint,  the operative
pleading,  alleges  unfair  competition,  breach of contract,  breach of implied
covenant  of good faith and fair  dealing,  unjust  enrichment  and  fraud.  The
plaintiff  is  seeking  attorneys'  fees and  damages,  and  enforcement  of the
contract.  The  litigation  is in the discovery  stage and the ultimate  outcome
cannot presently be determined. Accordingly, no provision for any liability that
may  result  upon  adjudication  has  been  made in the  consolidated  financial
statements.

                                  Page 6 of 13
<PAGE>


ITEM 2.                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (In thousands)

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  includes a number of  forward-looking  statements  which reflect the
Company's current view with respect to future events and financial  performance.
These forward-looking statements are subject to certain risks and uncertainties,
including those discussed in the Other Factors section of this Item 2, elsewhere
in this Form 10-Q and as set forth in the  Company's  form 10-K on file with the
SEC that could cause actual results to differ materially from historical results
or those  anticipated.  In this  report,  the words  "anticipates,"  "believes,"
"expects," "intends," "future," and similar expressions identify forward-looking
statements.  Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking statements, which speak only as of the date hereof.

RESULTS OF OPERATIONS

REVENUE
Revenue for the second  quarter of fiscal year 1997,  which ended  September 30,
1996,  decreased to $1,160 from $2,496 in the second quarter a year ago. The 54%
decrease in revenues was due to lower than anticipated  sales during the quarter
ended September 30, 1996. Also  contributing  was the continued  slowness in the
marketplace,  particularly  in the  Japanese  market.  During the  quarter,  the
Company  received a large  purchase order for products in which the license fees
will be paid in installments over fifteen months. Accordingly,  the Company will
recognize  revenue on this sale as the  payments  become due under the  purchase
order.  Revenue for the six month period ended September 30, 1996,  decreased to
$4,271 from $5,139 over the six month period ended  September 30, 1995. This 17%
decrease  is the result of the lower than  anticipated  revenues  in the quarter
ended  September  30,  1996 and the large  deferred  order  partially  offset by
increased sales in the prior quarter.  International sales,  primarily Japan and
the Far East  accounted for 29% of total revenue in the second quarter of fiscal
1997 compared to 49% in the second quarter a year ago.

The  Company's  expense  levels are based,  in part, on its  expectations  as to
future revenue levels,  which are difficult to predict. A substantial portion of
the Company's  revenues in each quarter  results from shipments  during the last
month of that quarter,  and for that reason among others, the Company's revenues
are subject to significant quarterly  fluctuations.  If revenue levels are below
expectations,  as in the quarter ended September 30, 1996, operating results may
be materially and adversely affected.  In addition,  the Company's quarterly and
annual results may fluctuate as a result of many factors, including the size and
timing  of  software  license  fees,  timing  of  co-development  projects  with
customers, timing of operating expenditures,  increased competition, new product
announcements  and releases by the Company and its competitors,  gain or loss of
significant  customers or distributors,  expense levels,  renewal of maintenance
contracts, pricing changes by the Company or its competitors, personnel changes,
foreign currency  exchange rates, and economic  conditions  generally and in the
electronics industry specifically.

COST OF REVENUE
Cost of license  fees and other for the second  quarter of fiscal  year 1997 was
$215,  compared to $88 in the second  quarter of fiscal  1996.  Cost of sales of
license fees for the six months ended  September 30, 1996 was $334,  compared to
$154 in the six months ended  September 30, 1995.  Cost of sales of license fees
is primarily the amortization of software development costs and royalty payments
due to third  parties and both  increased  for the quarter and six months  ended
September 30, 1996.

Cost of  maintenance  fees for the second  quarter of fiscal  year 1997 was $137
compared to $98 in the second quarter of fiscal 1996.  Cost of maintenance  fees
for the six months ended  September  30, 1996 was $236  compared to $222 for the
six months ended September 30, 1995.  Cost of maintenance  fees is primarily the
cost of providing technical support and technical documentation.

ENGINEERING, RESEARCH AND DEVELOPMENT EXPENSES
Engineering,  research and development expenses for the second quarter of fiscal
year 1997 were $844 compared to $820 in the second quarter a year ago. Comparing
the  second  quarter  of fiscal  1997 and the  second  quarter  of fiscal  1996,
engineering,  research  and  development  expenses  were  73% and  33% of  total
revenue, respectively.  The slight dollar increase in engineering,  research and
development  expenses  during  this  period is due to  depreciation  of improved
capital  equipment and software  acquisitions  partially  offset by


                                  Page 7 of 13

<PAGE>

capitalized  software  development  costs and reduced costs in Taiwan with lower
salary and expense  rates.  The  percentage  increase was primarily due to lower
than anticipated revenues in the second quarter of fiscal 1997.

Engineering,  research  and  development  expenses  for  the  six  months  ended
September  30,  1996,  were $1,512  compared to $1,634 for the six months  ended
September  30,  1995.  Comparing  these  periods,   engineering,   research  and
development  expenses  were  35% and 32% of  total  revenue,  respectively.  The
decrease  in  absolute  dollars  is due to lower  costs in the first  quarter of
fiscal  1997  with  increased  capitalized  software  development  costs  and  a
temporary  reduction in headcount in the United States with  increases in Taiwan
at lower salary and expense rates. The percentage  increase was primarily due to
lower than  anticipated  revenues  in the second  quarter  of fiscal  1997.  The
Company  continues to strengthen  its  engineering  capabilities  with increased
staffing and increased emphasis on development of new technology.

SELLING & MARKETING EXPENSES
Selling  and  marketing  expenses  for the second  quarter  of fiscal  year 1997
increased to $1,781 from $1,224 in the second  quarter a year ago. In the second
quarter  of fiscal  1997 and the  second  quarter of fiscal  1996,  selling  and
marketing expenses were 154% and 49% of total revenue, respectively. Selling and
marketing  expenses for the six months ended  September  30, 1996,  increased to
$3,349 from $2,584 in the six months ended September 30, 1995. Comparing the six
month periods, selling and marketing expenses were 78% and 50% of total revenue,
respectively.  The  dollar  increases  are  due to the  addition  of  sales  and
marketing  personnel and an increase in the reserve for bad debt. The percentage
increases were primarily due to lower than anticipated  revenues,  however,  the
Company expects that selling and marketing expenses will continue to increase if
revenue increases.

GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative  expenses increased to $695 for the second quarter of
fiscal  year  1997,  from $194 in the second  quarter a year ago.  In the second
quarter of fiscal 1997 and the second quarter of fiscal 1996,  selling,  general
and  administrative  expenses were 60%, and 8% of total  revenue,  respectively.
General and administrative expenses for the six months ended September 30, 1996,
increased  to $1,103  from $384 in the six  months  ended  September  30,  1995.
Comparing the six month periods,  general and  administrative  expenses were 26%
and  7%  of  total  revenue,  respectively.  The  absolute  dollar  increase  is
attributed  to increases to the senior  management  team,  relocation  expenses,
consulting  expenses and legal expenses and the percentage increase is primarily
due to reduced  revenues.  The Company  expects that general and  administrative
expenses  will  decline  in future  quarters  due to lower  head  count and cost
controls.

OTHER INCOME (EXPENSE)
Other income  (expense)  increased to $80 from $(9) comparing the second quarter
of fiscal year 1997 to the second quarter of fiscal 1996. Other income (expense)
increased to $185 from $(28)  comparing the six months ended  September 30, 1996
with the six months ended  September  30,  1995.  Other  expenses are  primarily
interest  income and expense and the increases are due to investing the proceeds
received in the secondary offering.

LIQUIDITY AND CAPITAL RESOURCES
During  the six months  ended  September  30,  1996,  cash and cash  equivalents
decreased $4,165 from $10,238 to $6,073.  This decrease resulted  primarily from
cash  used by  operating  activities  of  $1,988  and  $2,385  of cash  used for
investing activities. The Company's primary unused sources of funds at September
30, 1996,  consisted of cash and cash equivalents of approximately  $6,073 and a
bank line of credit of $2,000.  The Company believes its cash and cash generated
from  operations  and  available  borrowings  will be  sufficient to finance its
operations for at least the next twelve months.  The Company's cash requirements
in the future may also be financed through additional equity or debt financings.
There can be no  assurance  that such  financing  can be obtained  at  favorable
terms,  if at all. The Company's  open  commitments  for the purchase of capital
assets as of September 30, 1996 were approximately $100.

The Company is currently engaged in litigation with Mentor Graphics.  Regardless
of the  outcome  of this  pending  litigation,  the  litigation  may  result  in
substantial  cost and  expenses  to the  Company and  significant  diversion  of
efforts by the Company's  technical and management  personnel.  In addition,  an
adverse  ruling in the  litigation  could have a material  adverse effect on the
Company's business, operating results or financial condition.

                                  Page 8 of 13
<PAGE>


OTHER FACTORS AFFECTING FUTURE RESULTS OF OPERATIONS
Revenues  from  sales of the SVR GARDS  family  of  products  have  historically
represented  a  substantial  majority of the  Company's  revenues.  Although the
Company has recently introduced its SVR FloorPlacer and SVR SonIC products,  the
Company  expects that revenues from the sale of SVR GARDS products will continue
to  account  for a  significant  portion  of  the  Company's  revenues  for  the
foreseeable  future.  The life cycles of the Company's products are difficult to
predict due to the effect of new product  introductions or product  enhancements
by the  Company  or its  competitors,  market  acceptance  of new  and  enhanced
versions of the Company's products and competition in the Company's marketplace.
Declines in the demand for the SVR GARDS family of products, whether as a result
of competition,  technological change, price reductions or otherwise, could have
a material  adverse  effect on the  Company's  business,  operating  results and
financial condition.

The EDA industry is  characterized  by  extremely  rapid  technological  change,
frequent new product introductions and enhancements, evolving industry standards
and rapidly changing customer requirements.  The development of more complex ICs
embodying new technologies will require increasingly sophisticated design tools.
The  Company's  future  results of  operations  will depend,  in part,  upon its
ability  to enhance  its  current  products  and to develop  and  introduce  new
products  on a  timely  and  cost-effective  basis  that  will  keep  pace  with
technological developments and evolving industry standards and methodologies, as
well as address the increasingly sophisticated needs of the Company's customers.
The  Company  has in the past and may in the  future  experience  delays  in new
product  development  and product  enhancements.  The Company  began  commercial
shipments  of its new SVR  FloorPlacer  software  products in the quarter  ended
March 31, 1995, and of its new SVR SonIC software  products in the quarter ended
June 30,  1995.  There can be no  assurance  that these new  products  will gain
market  acceptance  or that the Company will be  successful  in  developing  and
marketing   product   enhancements   or  other  new  products  that  respond  to
technological   change,   evolving  industry  standards  and  changing  customer
requirements, that the Company will not experience difficulties that could delay
or prevent the  successful  development,  introduction  and  marketing  of these
products  or  product  enhancements,  or  that  its  new  products  and  product
enhancements  will  adequately  meet the  requirements  of the  marketplace  and
achieve any significant  degree of market  acceptance.  In addition,  all of the
Company's  current products operate in, and planned future products will operate
in, the Unix operating system. In the event that another operating system,  such
as Windows NT, were to achieve broad acceptance in the EDA industry, the Company
would be required to port its products to such an operating system,  which would
be costly and time  consuming  and could have a material  adverse  effect on the
Company's  business,  operating results or financial  condition.  Failure of the
Company,  for  technological  or other  reasons,  to develop and  introduce  new
products and product  enhancements in a timely and  cost-effective  manner would
have a material and adverse effect on the Company's business,  operating results
and financial condition.  In addition,  the introduction or even announcement of
products  by the  Company  or one or  more  of  its  competitors  embodying  new
technologies  or changes in industry  standards or customer  requirements  could
render the Company's existing products obsolete or unmarketable.  Such deferment
of purchases  could have a material  adverse  effect on the Company's  business,
operating results or financial condition.

Software products as complex as those offered by the Company may contain defects
or failures when introduced or when new versions are released.  The Company has,
in the past,  discovered  software  defects in certain of its  products  and may
experience  delays or lost  revenue  to  correct  such  defects  in the  future.
Although the Company has not experienced material adverse effects resulting from
any such defects to date, there can be no assurance that, despite testing by the
Company, errors will not be found in new products or releases after commencement
of commercial shipments, resulting in loss of market share or failure to achieve
market  acceptance.  Any such  occurrence  could have a material effect upon the
Company's business, operating results or financial condition.

A  small  number  of  customers  account  for a  significant  percentage  of the
Company's total revenue. There can be no assurance that sales to these entities,
individually or as a group, will reach or exceed historical levels in any future
period.  Any  substantial  decrease  in sales to one or more of these  customers
could  have a  material  adverse  effect on the  Company's  business,  operating
results or  financial  condition.  The Company  currently  sells and markets its
products   overseas,   other  than  in  Japan,   through  a  limited  number  of
distributors.  The Company hired new distributors in Taiwan,  Korea,  Europe and
Singapore within the last year. The Company has little history of performance by
its  new  distributors.  In  addition,  there  can  be  no  assurance  that  the
distributors  will be able to successfully  distribute and support the Company's
products  on a timely  basis or that such  distributors  will not  reduce  their
efforts   devoted  to  selling  the  Company's   products  or  terminate   their


                                  Page 9 of 13
<PAGE>

relationship  with the Company as a result of competition  with other suppliers'
products.  The loss of or changes in the relationship with or performance by one
or  more of the  Company's  international  distributors  could  have a  material
adverse  effect on the Company's  business,  results of operations and financial
condition.  There  can  also be no  assurance  that  the  Company's  distributor
strategy will be  successful or that the Company will be able to retain  current
distributors  or to identify new  distributors in the future that are acceptable
to the Company.

The licensing and sales of the Company's  software products generally involves a
significant commitment of capital by prospective  customers,  with the attendant
delays  frequently  associated  with  large  capital  expenditures  and  lengthy
acceptance  procedures.  For these and other reasons, the sales cycle associated
with the licensing of the Company's products is typically lengthy and subject to
a number of  significant  risks over which the Company has little or no control.
Because the timing of customer orders is hard to predict,  the Company  believes
that its quarterly  operating  results are likely to vary  significantly  in the
future.  Actual  results of the  Company  could vary  materially  as a result of
factors, including,  without limitation, the high average selling price and long
sales cycle for the Company's  products,  the relatively  small number of orders
per quarter,  dependence on sales to a limited number of large customers, timing
of receipt of orders,  successful  product  introduction  and  acceptance of the
Company's products and increased competition.

The  Company  is  dependent  upon  the  semiconductor  and more  generally,  the
electronics  industries.  Each of these  industries  is  characterized  by rapid
technological  change, short product life cycles,  fluctuations in manufacturing
capacity and pricing and gross margin  pressures.  Each of these  industries  is
highly cyclical and has periodically experienced significant downturns, often in
connection with, or in anticipation of declines in general  economic  conditions
during which the number of new IC design projects often decreases.  Purchases of
new licenses from the Company are largely dependent upon the commencement of new
design projects,  and factors negatively affecting any of these industries could
have a material adverse effect on the Company's  business,  operating results or
financial  condition.  The  Company  has  experienced  some order  delays as the
semiconductor  industry is  experiencing  a slowdown.  The  Company's  business,
operating  results  and  financial   condition  may,  in  the  future,   reflect
substantial  fluctuations from period to period as a consequence of patterns and
general economic conditions in either the semiconductor or electronics industry.

                           PART II. OTHER INFORMATION

Item 1.           Legal Proceedings:  Mentor Graphics filed a motion for summary
                  adjudication  with the court on August 21, 1996. A hearing was
                  held on the motion on  November  7,  1996,  and the motion was
                  denied.  There  can be no  assurance  that  there  will be any
                  resolution  of the  litigation  on terms  satisfactory  to the
                  Company.

Item 2.           Changes in Securities:                      Not Applicable

Item 3.           Defaults Upon Senior Securities:            Not Applicable

Item 4.           Submission of Matters to a Vote of Securities Holders:
                  (A)  On  September  19,  1996,   the  Annual  Meeting  of  the
                  Shareholders  of the Registrant was held. A total of 9,428,634
                  shares or  approximately  83% of the shares  outstanding  were
                  represented at this meeting.
                  (B) At the meeting,  the  Shareholders  elected the  following
                  individuals  as Directors  with  9,270,379  votes in favor and
                  158,255 votes withheld:  R. Anderson,  G. Abood, T. Sherby, Y.
                  Nishi, B. Huberman, J. Doyle and the following individual, Roy
                  Rogers,  as Director with 9,270,329 votes in favor and 158,305
                  votes withheld.
                  (C) The amendment to the Company's  1988 Stock Option Plan was
                  approved  by  4,332,190  in  favor,  375,106  opposed,  42,063
                  abstained and 4,679,285 non-broker votes.
                  (D)  The  amendment  to  the  Company's  1993  Employee  Stock
                  Purchase  Plan was  approved by  5,487,504  in favor,  164,529
                  opposed, 38,163 abstained and 3,738,439 non-broker votes.
                  (E) The  amendment  to the  Company's  1990  Directors'  Stock
                  Option  Plan was  approved  by  8,310,728  in  favor,  360,949
                  opposed, 60,763 abstained and 696,194 non-broker votes.

Item 5.           Other Information:                 Not Applicable

                                 Page 10 of 13
<PAGE>


Item 6.           Exhibits and Reports on Form 8-K:

                  (A)                          Exhibits:

Exhibit
Number        Description of Exhibit
-------       ----------------------

(a)(1)   The  financial  statements  filed as part of this  Report at Item 1 are
         listed in the Index to Financial  Statements  and  Financial  Statement
         Schedules on page 2 of this Report.

(a)(2))  The  following  exhibits are filed with this  Quarterly  Report on Form
         10-Q:

3.01     Registrant's Articles of Incorporation as amended to date (incorporated
         by reference to Exhibit 3.01 of Registrant's  Registration Statement on
         Form S-1 ( File No.  2-89943)  filed March 14,  1984,  as amended  (the
         "1984 Registration Statement")).

3.02     Registrant's  bylaws, as amended to date  (incorporated by reference to
         Exhibit 4.01 of the 1984 Registration Statement).

10.01*   Registrant's   1990  Directors  Stock  Option  Plan   (incorporated  by
         reference to Exhibit A of  Registrant's  Proxy Statement dated July 10,
         1990).

10.03*   Registrant's 1988 Stock Option Plan, as amended to date,  including the
         stock  option  grant  form and the stock  option  exercise  notice  and
         agreement  (incorporated  by reference to Exhibit 10.15 of Registrant's
         Annual Report on Form10-KSB for the fiscal year ended March 31, 1993).

10.05*   Registrant's  1993  Employee  Stock  Purchase  Plan, as amended to date
         (incorporated  by reference  to Exhibit  10.20 of  Registrant's  Annual
         Report on Form 10-KSB for the fiscal year ended March 31, 1993).

10.06    Stock Purchase  Agreement dated February 12,1993 between the Registrant
         and several  investors  (incorporated  by  reference to Exhibit 4.01 of
         Registrant's current report on Form 8-K filed on April 15, 1993).

10.07    Stock Purchase  Agreement  dated January 19,1994 between the Registrant
         and several  investors  (incorporated  by  reference to Exhibit 4.01 of
         Registrant's current report on Form 8-K filed on February 4, 1994).

10.08    Warrant  Agreement  dated March 22, 1994  between  the  Registrant  and
         Prutech  Research  and  Development  Partnership  II  (incorporated  by
         reference to Exhibit 10.22 of Registrant's Annual Report on Form 10-KSB
         for the fiscal year ended March 31, 1994).

10.09    Subordination  debt  agreement  dated  September  15, 1994  between the
         registrant and several investors  (incorporated by reference to Exhibit
         4.01 of  Registrant's  current  report on Form 8-K filed on November 4,
         1994).

10.10*   Employment  Agreement dated October 31, 1995 between the Registrant and
         Glenn  E.  Abood   (incorporated  by  reference  to  Exhibit  10.10  of
         Registrant's  Registration  Statement  on Form S-2  filed  December  6,
         1995).

10.11    Stock Purchase  Agreement dated June 6, 1995 between the Registrant and
         several  investors  (incorporated  by reference to Exhibit 10.10 of the
         Registrant's  Annual  Report on Form  10-KSB for the fiscal  year ended
         March 31, 1995).

10.12    Security  and Loan  Agreement  dated  September  15,  1995 by and among
         Imperial Bank and the Registrant  (incorporated by reference to Exhibit
         10.12 of the  Registrant's  Registration  Statement  on Form SB-2 filed
         December 6, 1995).

10.13    Master  Equipment Lease Agreement dated November 9, 1995 by and between
         Financing   for  Science   International,   Inc.  and  the   Registrant
         (incorporated  by  reference  to  Exhibit  10.13  of  the  Registrant's
         Registration Statement on Form SB-2 filed December 6, 1995).

27.00    Financial Data Schedule

         *Management Contract or Compensatory Plan or Arrangement

   (B)   Reports on Form 8-K:  None filed during period

                                 Page 11 of 13
<PAGE>


                                    SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                        SILICON VALLEY RESEARCH





Date:  November 13, 1996                         /s/ Cheryl S. Billings
       -----------------                         ----------------------
                                                 Cheryl S. Billings
                                                 Vice President, Finance and
                                                 Chief Financial Officer

                                                 (Chief Financial and Accounting
                                                 Officer)



                                 Page 12 of 13